Date:13/02/2003 URL: http://www.thehindu.com/2003/02/13/stories/2003021304271100.htm

National

Take AI, IA off divestment list, says Ministry

By Our Special Correspondent

NEW DELHI FEB. 12. The Civil Aviation Ministry has requested the Cabinet Committee on Disinvestment to take off Air India and Indian Airlines from the list of Government-owned corporations/companies to be disinvested. A note to this effect has been sent to the Department of Disinvestment for decision in its next meeting.

The move is necessary to enable AI and IA to go ahead with their plans for the acquisition of new aircraft to augment and replenish their fleet.

The fleet acquisition proposal is awaiting Government approval at the level of the Cabinet Committee on Security (CCS).

After its meeting last month, the CCS advised the Ministry of Civil Aviation to get the clearance of the Cabinet Committee on Disinvestment on the disinvestment status of AI and IA, paving the way for Government funding of their fleet acquisition plan.

The proposal assumes significance as a pre-budget exercise, particularly if the Government has to fund the project and make an announcement in the budget proposals.

An amount of Rs. 325 crores had been assured by the Government to IA for fleet acquisition as per the recommendation of the Kelkar Committee on restructuring. In May last year, the IA Board of Directors had approved a Rs 10,000-crore proposal for the acquisition of 43 Airbus planes of the A-319, A-320 and A-321 category to replace its aging fleet.

The Air India Board has also approved the acquisition of 17 long-haul and medium capacity short-haul aircraft.

It is now evaluating the technical and financial bids from the European Consortium, Airbus Industrie and the Seattle-based Boeing Company.

The short-listed aircraft include Boeing-777 and Airbus-340 to meet its long-range requirement.

As such, besides the commercial aircraft and engine manufacturers, the United States Government and the French Government are also pressing for an early decision in support of Boeing and Airbus respectively.

The French Prime Minister, Jean-Pierre Raffarin, also took up the issue with the Prime Minister, Atal Behari Vajpayee, during his recent visit to India.

The disinvestment of both the airlines flopped about two years ago when the companies bidding for them separately were either not cleared by the CCS or dropped out.

In any case, none of the big players had entered the market for picking up stake in the Indian carriers.

Later the atmosphere was not too congenial for disinvestment after the events of September 11 terrorists attacks in the U.S. which resulted in recession in the industry.